Answer to Question #48716 in Microeconomics for Rishi

2014-11-07T23:13:58-0500

Question #48716

what i wanted to ask was why when price rises supply also rises ?(considerind all other factors constant except price cetrius peribus)basically if price rises people should buy less and so supply should reduce

Expert's answer

2014-11-11T11:34:29-0500

When price rises not supply at all (the move of the supply curve), but only quantity supplied rises (because the higher is the price, the more producers want to produce to receive more revenue). But as the price rised, quantity demanded decreases, because people can&#039;t buy the same amount, so there is a surplus in the market. And only in the long-run either supply, or demand will change to cut the surplus.